Anadarko Petroleum Corporation (APC) today announced 2014 fourth-quarter results, reporting a net loss attributable to common stockholders of $395 million, or $0.78 per share (diluted). These results include certain items typically excluded by the investment community in published estimates. In total, these items decreased net income by $582 million, or $1.15 per share (diluted), on an after-tax basis.(1) Cash flow from operating activities in the fourth quarter of 2014 was $1.952 billion, and discretionary cash flow totaled $2.412 billion.(2)

For the year ended Dec. 31, 2014, Anadarko reported a net loss attributable to common stockholders of $1.750 billion, or $3.47 per share (diluted), which includes a net loss of $4.045 billion associated with the settlement of the Tronox Adversary Proceeding, after tax. Full-year 2014 cash flow from operating activities was $8.466 billion. Discretionary cash flow for the year totaled $9.404 billion.(2)

2014 HIGHLIGHTS

Delivered sales-volume growth of more than 11 percent, increasing year-over-year sales volumes by approximately 86,000 barrels of oil equivalent (BOE) per day on a divestiture-adjusted basis(3)

Achieved a reserve-replacement ratio of more than 160 percent at competitive costs

Accelerated more than $2.5 billion of value through asset monetizations

Achieved significant progress on several large-scale projects, highlighted by the recent startup of the 80,000-barrels-of-oil-per-day (BOPD) Lucius spar in the deepwater Gulf of Mexico

“Anadarko’s fourth-quarter operating performance was a capstone to another terrific year for our company,” said Anadarko Chairman, President and CEO Al Walker. “In 2014, we demonstrated the quality of our portfolio by delivering results that exceeded the midpoint of our initial sales-volume guidance by approximately 38,000 BOE per day,(3) while staying well within our initial range of capital investment guidance and generating free cash flow.(2) This outperformance was primarily driven by results in the Wattenberg field, where we enhanced efficiencies in our drilling and completions and leveraged the competitive advantage of our expansive midstream infrastructure to significantly bolster our growth. We believe our efficient allocation of capital, active portfolio management and commitment

to financial discipline position Anadarko to deliver differentiating performance in the challenging current environment and as commodity prices recover.”

SALES VOLUMES AND PROVED RESERVES

Anadarko’s full-year sales volumes of natural gas, crude oil and natural gas liquids (NGLs) totaled a record 306 million BOE, or an average of 838,000 BOE per day, on a divestiture-adjusted basis.(3)Fourth-quarter 2014 sales volumes of natural gas, crude oil and NGLs totaled 79 million BOE, or an average of 854,000 BOE per day.

Anadarko organically added 503 million BOE of proved reserves in 2014 before the effects of price revisions and incurred oil and natural gas exploration and development costs of approximately $8.8 billion.(2) The company estimates its proved reserves at year-end 2014 totaled approximately 2.86 billion BOE, with 69 percent of its reserves categorized as proved developed. At year-end 2014, Anadarko’s proved reserves were comprised of 49 percent liquids and 51 percent natural gas.

U.S. ONSHORE HIGHLIGHTS

In 2014, Anadarko’s U.S. onshore operating areas achieved a 16-percent year-over-year increase in total sales volumes, including an increase of 78,000 barrels per day in liquids volumes, and an approximate 50-percent increase, or 49,000 BOPD, in oil volumes on a divestiture-adjusted basis.(3)This growth was driven by record production in several major growth plays, including the Wattenberg field, Eagleford Shale and Wolfcamp Shale.

Anadarko’s Wattenberg field in Colorado continued to demonstrate excellent performance as the company achieved year-over-year growth of approximately 55 percent, increasing sales volumes by more than 60,000 BOE per day over its 2013 average of 109,000 BOE per day. Significant infrastructure was placed in service in the field during the year, including the Lancaster cryogenic plant, Front Range NGL pipeline and more than 300 million cubic feet per day of additional field compression. These expansions, coupled with continued strong reservoir performance and enhanced drilling and completions efficiencies, underpinned Wattenberg’s production growth.

In the Delaware Basin in West Texas, the company exited the year with ten operated rigs and continued its successful evaluation of the extensive Wolfcamp Shale oil opportunity. Anadarko continues to expand key infrastructure to facilitate future growth from the basin, including the integration of the Nuevo Midstream assets acquired by Anadarko’s midstream limited partnership, Western Gas Partners, LP (WES).

INTERNATIONAL AND DEEPWATER HIGHLIGHTS

In 2014, Anadarko advanced multiple significant mega projects and achieved a net production record at the El Merk project in Algeria. The company commissioned the 80,000-BOPD Lucius facility in the deepwater Gulf of Mexico and achieved first oil on Jan. 16, 2015 – just over three years from project sanction. Also in the Gulf of Mexico, the 80,000-BOPD Heidelberg project remains on track for first oil in 2016, as construction on the topsides is more than 70-percent complete, and two deepwater drilling rigs are actively drilling development wells in the field. In addition, Anadarko’s non-operated 80,000-barrels-per-day TEN development offshore Ghana also remains on schedule with first production expected in 2016, and new gas-handling infrastructure was completed in the adjacent Jubilee field during the fourth quarter, which is expected to enable increased oil production beginning in 2015.

During the fourth quarter, the Government of Mozambique gazetted the Decree Law, which is an important step in providing the appropriate framework for a stable business environment for investors, customers, financiers and construction contractors as Anadarko advances its large-scale LNG project. Anadarko and its partners in Mozambique’s Offshore Area 1 have continued to advance long-term LNG sales agreements with the recent addition of new non-binding Heads of Agreement (HOAs) with customers in Asian markets. With these new agreements, the partners have HOAs in place covering a total of more than 8 million tonnes per annum.

Anadarko also maintained an active exploration and appraisal program during the year, laying the foundation for potential future mega projects. Appraisal activity offshore Côte d’Ivoire at the Paon discovery and in the Gulf of Mexico at the Shenandoah discovery continued to validate the company’s geologic models around these apparent commercial discoveries.

OPERATIONS REPORT

For additional details on Anadarko’s fourth-quarter 2014 operations and exploration program, please refer to the comprehensive Operations Report available at www.anadarko.com.

FINANCIAL HIGHLIGHTS

Anadarko ended 2014 with approximately $7.4 billion of cash on hand and, subsequent to year-end, the company remitted final payment to fully resolve the Tronox Adversary Proceeding, converted its secured debt revolver to an unsecured facility and announced a commercial paper program.

During the year, the company generated approximately $150 million of free cash flow, including $696 million of capital investments incurred by WES.(2) Anadarko also closed transactions to monetize more than $2.5 billion of assets in 2014, including the $1.1 billion divestment of its China subsidiary,

the $500 million sale of its non-operated interest in the Vito Gulf of Mexico development, the $442 million Eaglebine carried-interest agreement, and most recently the $120 million divestiture of non-core assets in the Midland Basin. This total does not include the previously announced $2.64 billion Mozambique sell-down and $581 million Pinedale/Jonah divestiture. At year-end 2014, Anadarko’s net debt to adjusted capitalization ratio was approximately 26 percent.(2)

CONFERENCE CALL TOMORROW AT 8 A.M. CST, 9 A.M. EST

Anadarko will host a conference call on Tuesday, Feb. 3, 2015, at 8 a.m. Central Standard Time (9 a.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2014 results. The dial-in number is 855.812.0464 in the U.S., or 970.300.2271 internationally. The confirmation number is 54428059. For complete instructions on how to participate in the conference call, or to listen to the live audio webcast and slide presentation, please visit www.anadarko.com. A replay of the call will be available on the website for approximately 30 days following the conference call.

(1) See the accompanying table for details of certain items affecting comparability.

(2) See the accompanying table for a reconciliation of GAAP to non-GAAP financial measures and a statement indicating why management believes the non-GAAP financial measures provide useful information for investors.

(3) See the accompanying table for a reconciliation of “divestiture-adjusted” or “same-store” sales volumes, which are intended to present performance of Anadarko’s continuing asset base, giving effect to recent divestitures.

Anadarko Petroleum Corporation’s mission is to deliver a competitive and sustainable rate of return to shareholders by exploring for, acquiring and developing oil and natural gas resources vital to the world’s health and welfare. As of year-end 2014, the company had approximately 2.86 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko and APC Flash Feed updates, please visit www.anadarko.com.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Anadarko believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release, including Anadarko’s ability to realize itsexpectations regarding performance in this challenging economic environment, finalize year-end reserves, timely complete and commercially operate the projects and drilling prospects identified in this news release, successfullyplan, secure necessary government approvals, finance, build and operate the necessary infrastructure and LNG park and achieve production and budget expectations on its mega projects. See “Risk Factors” in the company’s2013 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other public filings and press releases. Anadarko undertakes no obligation to publicly update or revise any forward-looking statements.

Total gains (losses) on derivatives, net, less net cash from settlement

of commodity derivatives*

$

(254)

$

(162)

$

(0.32)

Gains (losses) on divestitures, net

(303)

(192)

(0.38)

Impairments, including unproved properties

(548)

(346)

(0.68)

Inventory impairments

(60)

(38)

(0.07)

Cash received in early settlement of oil derivatives

126

80

0.16

Litigation settlement

50

32

0.06

Interest expense related to Tronox settlement

(22)

(14)

(0.03)

Change in uncertain tax positions (FIN 48)

—

58

0.11

$

(1,011)

$

(582)

$

(1.15)

* For the quarter ended December 31, 2014, this includes $40 million related to commodity derivatives, $(293) million related to other derivatives, and $(1) million related to gathering, processing, and marketing sales.

Quarter Ended December 31, 2013

Before

After

Per Share

millions except per-share amounts

Tax

Tax

(diluted)

Total gains (losses) on derivatives, net, less net cash from settlement

of commodity derivatives*

$

(52)

$

(34)

$

(0.07)

Gains (losses) on divestitures, net

(635)

(402)

(0.80)

Impairments

(162)

(103)

(0.21)

Third-party property well and platform decommissioning obligation

(35)

(22)

(0.04)

Tronox-related contingent loss

(850)

(576)

(1.14)

Change in uncertain tax positions (FIN 48)

—

(6)

(0.01)

$

(1,734)

$

(1,143)

$

(2.27)

* For the quarter ended December 31, 2013, this includes $(155) million related to commodity derivatives, $111 million related to other derivatives, and $(8) million related to gathering, processing, and marketing sales.

Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of net income (loss) attributable to common stockholders (GAAP) to adjusted net income (loss) (non-GAAP), cash provided by operating activities (GAAP) to discretionary cash flow from operations (non-GAAP), as well as free cash flow (non-GAAP) as required under Regulation G of the Securities Exchange Act of 1934. Management uses adjusted net income (loss) to evaluate the Company’s operational trends and performance.

Management uses discretionary cash flow from operations because it is useful in comparisons of oil and gas exploration and production companies as it excludes certain fluctuations in assets and liabilities and current taxes related to certain items affecting comparability. Management uses free cash flow to demonstrate the Company’s ability to internally fund capital expenditures and to service or incur additional debt.

Quarter Ended

Year Ended

December 31,

December 31,

millions

2014

2013

2014

2013

Net cash provided by operating activities

$

1,952

$

2,104

$

8,466

$

8,888

Add back

Algeria exceptional profits tax settlement

—

—

—

(730)

Increase (decrease) in accounts receivable

1

257

(103)

11

(Increase) decrease in accounts payable and accrued expenses

703

(187)

(7)

(150)

Other items—net

(153)

(168)

81

(146)

Certain nonoperating and other excluded items

4

43

29

160

Current taxes related to asset monetizations

(95)

—

938

—

Discretionary cash flow from operations

$

2,412

$

2,049

$

9,404

$

8,033

Quarter Ended

Year Ended

December 31,

December 31,

millions

2014

2013

2014

2013

Discretionary cash flow from operations

$

2,412

$

2,049

$

9,404

$

8,033

Less capital expenditures*

2,169

2,612

9,256

8,523

Free cash flow

$

243

$

(563)

$

148

$

(490)

*

Includes Western Gas Partners, LP (WES) capital expenditures of $206 million for the quarter ended December 31, 2014, $170 million for the quarter ended December 31, 2013, $696 million for the year ended December 31, 2014, and $792 million for the year ended December 31, 2013.

Presented below are reconciliations of costs incurred (GAAP) to oil and natural gas exploration and development costs (non-GAAP) and total debt (GAAP) to net debt (non-GAAP). Management believes oil and natural gas exploration and development costs is a more accurate reflection of the expenditures incurred during the current year, excluding certain obligations to be paid in future periods. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand.

Year Ended

December 31,

millions

2014

Costs incurred

$

8,712

Asset retirement obligation liabilities incurred

(347)

Cash expenditures for asset retirement obligations

443

Oil and natural gas exploration and development costs

$

8,808

December 31, 2014

Anadarko

Anadarko

WGP*

excluding

millions

Consolidated

Consolidated

WGP

Total debt

$

15,092

$

2,423

$

12,669

Less cash and cash equivalents

7,369

67

7,302

Net debt

$

7,723

$

2,356

$

5,367

Anadarko

Anadarko

excluding

millions

Consolidated

WGP

Net debt

$

7,723

$

5,367

Total equity

22,318

19,725

Adjusted capitalization

$

30,041

$

25,092

Net debt to adjusted capitalization ratio

26 %

21 %

*

Western Gas Equity Partners, LP (WGP) is a publicly traded consolidated subsidiary of Anadarko and WES is a consolidated subsidiary of WGP.

Anadarko Petroleum Corporation

(Unaudited)

Quarter Ended

Year Ended

Summary Financial Information

December 31,

December 31,

millions except per-share amounts

2014

2013

2014

2013

Consolidated Statements of Income

Revenues and Other

Natural-gas sales

$

811

$

841

$

3,849

$

3,388

Oil and condensate sales

1,982

2,417

9,748

9,178

Natural-gas liquids sales

351

373

1,572

1,262

Gathering, processing, and marketing sales

278

289

1,206

1,039

Gains (losses) on divestitures and other, net

(245)

(582)

2,095

(286)

Total

3,177

3,338

18,470

14,581

Costs and Expenses

Oil and gas operating

310

323

1,171

1,092

Oil and gas transportation and other

315

259

1,184

1,022

Exploration

639

615

1,639

1,329

Gathering, processing, and marketing

259

231

1,030

869

General and administrative

332

303

1,316

1,090

Depreciation, depletion, and amortization

1,215

969

4,550

3,927

Other taxes

263

258

1,244

1,077

Impairments

322

162

836

794

Algeria exceptional profits tax settlement

—

—

—

33

Deepwater Horizon settlement and related costs

1

3

97

15

Total

3,656

3,123

13,067

11,248

Operating Income (Loss)

(479)

215

5,403

3,333

Other (Income) Expense

Interest expense

199

173

772

686

(Gains) losses on derivatives, net

(256)

(5)

197

(398)

Other (income) expense, net

8

20

20

89

Tronox-related contingent loss

22

850

4,360

850

Total

(27)

1,038

5,349

1,227

Income (Loss) Before Income Taxes

(452)

(823)

54

2,106

Income Tax Expense (Benefit)

(102)

(98)

1,617

1,165

Net Income (Loss)

(350)

(725)

(1,563)

941

Net Income (Loss) Attributable to Noncontrolling Interests

45

45

187

140

Net Income (Loss) Attributable to Common Stockholders

$

(395)

$

(770)

$

(1,750)

$

801

Per Common Share

Net income (loss) attributable to common stockholders—basic

$

(0.78)

$

(1.53)

$

(3.47)

$

1.58

Net income (loss) attributable to common stockholders—diluted

$

(0.78)

$

(1.53)

$

(3.47)

$

1.58

Average Number of Common Shares Outstanding—Basic

507

504

506

502

Average Number of Common Shares Outstanding—Diluted

507

504

506

505

Exploration Expense

Dry hole expense

$

235

$

255

$

762

$

556

Impairments of unproved properties

267

186

483

308

Geological and geophysical expense

75

97

168

208

Exploration overhead and other

62

77

226

257

Total

$

639

$

615

$

1,639

$

1,329

Anadarko Petroleum Corporation

(Unaudited)

Quarter Ended

Year Ended

Summary Financial Information

December 31,

December 31,

millions

2014

2013

2014

2013

Cash Flows from Operating Activities

Net income (loss)

$

(350)

$

(725)

$

(1,563)

$

941

Adjustments to reconcile net income (loss) to net cash

provided by operating activities

Depreciation, depletion, and amortization

1,215

969

4,550

3,927

Deferred income taxes

115

(445)

(95)

90

Dry hole expense and impairments of unproved properties

502

441

1,245

864

Impairments

322

162

836

794

(Gains) losses on divestitures, net

303

635

(1,891)

470

Total (gains) losses on derivatives, net

(255)

4

207

(392)

Operating portion of net cash received (paid) in settlement

of derivative instruments

509

48

371

85

Other

123

72

327

246

Changes in assets and liabilities

Deepwater Horizon settlement and related costs

(3)

(5)

90

(2)

Algeria exceptional profits tax settlement

—

—

—

730

Tronox-related contingent loss

22

850

4,360

850

(Increase) decrease in accounts receivable

(1)

(257)

103

(11)

Increase (decrease) in accounts payable and accrued

expenses

(703)

187

7

150

Other items—net

153

168

(81)

146

Net Cash Provided by Operating Activities

$

1,952

$

2,104

$

8,466

$

8,888

Capital Expenditures

$

2,169

$

2,612

$

9,256

$

8,523

December 31,

December 31,

millions

2014

2013

Condensed Balance Sheets

Cash and cash equivalents

$

7,369

$

3,698

Accounts receivable, net of allowance

2,537

2,722

Other current assets

1,325

688

Net properties and equipment

41,552

40,929

Other assets

2,310

2,082

Goodwill and other intangible assets

6,606

5,662

Total Assets

$

61,699

$

55,781

Other current liabilities

4,934

5,703

Deepwater Horizon settlement and related costs

90

—

Tronox-related contingent liability

5,210

—

Long-term debt

15,092

13,065

Deferred income taxes

9,259

9,245

Other long-term liabilities

4,796

4,118

Stockholders’ equity

19,725

21,857

Noncontrolling interests

2,593

1,793

Total Equity

$

22,318

$

23,650

Total Liabilities and Equity

$

61,699

$

55,781

Capitalization

Total debt

$

15,092

$

13,565

Total equity

22,318

23,650

Total

$

37,410

$

37,215

Capitalization Ratios

Total debt

40 %

36%

Total equity

60 %

64%

Anadarko Petroleum Corporation

(Unaudited)

Sales Volumes and Prices

Average Daily Sales Volumes

Sales Volumes

Average Sales Price

Natural Gas

Crude Oil &

Condensate

NGLs

Natural Gas

Crude Oil &

Condensate

NGLs

Natural Gas

Crude Oil &

Condensate

NGLs

MMcf/d

MBbls/d

MBbls/d

Bcf

MMBbls

MMBbls

Per Mcf

Per Bbl

Per Bbl

Quarter Ended December 31, 2014

United States

2,549

220

119

234

20

12

$

3.46

$

68.66

$

27.57

Algeria

—

70

10

—

6

1

—

79.80

54.02

Other International

—

10

—

—

1

—

—

81.64

—

Total

2,549

300

129

234

27

13

$

3.46

$

71.67

$

29.63

Quarter Ended December 31, 2013

United States

2,643

167

100

243

16

9

$

3.46

$

93.01

$

40.30

Algeria

—

62

—

—

6

—

—

109.18

—

Other International

—

36

—

—

3

—

—

110.56

—

Total

2,643

265

100

243

25

9

$

3.46

$

99.20

$

40.30

Year Ended December 31, 2014

United States

2,589

203

116

945

74

43

$

4.07

$

87.99

$

35.48

Algeria

—

66

3

—

24

1

—

98.53

56.16

Other International

—

23

—

—

8

—

—

103.42

—

Total

2,589

292

119

945

106

44

$

4.07

$

91.58

$

36.01

Year Ended December 31, 2013

United States

2,652

158

91

968

58

33

$

3.50

$

97.02

$

37.97

Algeria

—

55

—

—

20

—

—

109.20

—

Other International

—

35

—

—

13

—

—

109.07

—

Total

2,652

248

91

968

91

33

$

3.50

$

101.41

$

37.97

Average Daily Sales Volumes

MBOE/d

Sales Volumes

MMBOE

Quarter Ended December 31, 2014

854

79

Quarter Ended December 31, 2013

806

74

Year Ended December 31, 2014

843

308

Year Ended December 31, 2013

781

285

Sales Revenue and Commodity Derivatives

Sales

Net Cash Received (Paid) from Settlement of Commodity Derivatives

Crude Oil &

Crude Oil &

millions

Natural Gas

Condensate

NGLs

Natural Gas

Condensate

NGLs

Quarter Ended December 31, 2014

United States

$

811

$

1,394

$

301

$

22

$

149

$

3

Algeria

—

514

50

—

335

—

Other International

—

74

—

—

—

—

Total

$

811

$

1,982

$

351

$

22

$

484

$

3

Quarter Ended December 31, 2013

United States

$

841

$

1,426

$

373

$

42

$

8

$

2

Algeria

—

618

—

—

(3)

—

Other International

—

373

—

—

—

—

Total

$

841

$

2,417

$

373

$

42

$

5

$

2

Year Ended December 31, 2014

United States

$

3,849

$

6,519

$

1,509

$

(85)

$

81

$

6

Algeria

—

2,372

63

—

375

—

Other International

—

857

—

—

—

—

Total

$

3,849

$

9,748

$

1,572

$

(85)

$

456

$

6

Year Ended December 31, 2013

United States

$

3,388

$

5,601

$

1,262

$

133

$

(53)

$

9

Algeria

—

2,184

—

—

6

—

Other International

—

1,393

—

—

—

—

Total

$

3,388

$

9,178

$

1,262

$

133

$

(47)

$

9

Anadarko Petroleum Corporation

Estimated Year-End Proved Reserves 2012 – 2014

MMBOE

2014

2013

2012

Proved Reserves

Beginning of year

2,792

2,560

2,539

Reserves additions and revisions

Discoveries and extensions

63

145

82

Infill-drilling additions

577

410

383

Drilling-related reserves additions and revisions

640

555

465

Other non-price-related revisions

(137)

(40)

(31)

Net organic reserves additions

503

515

434

Acquisition of proved reserves in place

—

36

4

Price-related revisions

(1)

(23)

(68)

Total reserves additions and revisions

502

528

370

Sales in place

(124)

(12)

(81)

Production

(312)

(284)

(268)

End of year

2,858

2,792

2,560

Proved Developed Reserves

Beginning of year

2,003

1,883

1,811

End of year

1,969

2,003

1,883

Anadarko Petroleum Corporation

Commodity Hedge Positions

As of February 2, 2015

Volume

Weighted Average Price per MMBtu

(thousand

MMBtu/d)

Floor Sold

Floor Purchased

Ceiling Sold

Natural Gas

Three-Way Collars

2015

635

$

2.75

$

3.75

$

4.76

Extendable Fixed Price –

Financial

2015*

170

$

4.17

__________________________________________________________________

*

Includes an option for the counterparty to extend the contract term to December 2016 at the same price.

E&Ps Locking in Cash Flows and Sales Prices OPEC’s agreement to cut production levels has kicked off a rush among shale oil companies to hedge their oil price risk above $50 for 2017 and 2018. The number of E&Ps selling oil for delivery next year has pushed the WTI forward curve into slight backwardation after two years of contango. Compare[Read More…]